ICFiles
SOC 2

content

Secure File Transfer Soc 2 starts at $1 per month

Join Us

 

ICFiles Logo

 

Tip: Update on IRS Revised Guidelines for Overseas Accounts

Tip of the Month

July, 2011

Get this Article  Get this Article & Suite of Tools

Tip: Update on IRS Revised Guidelines for Overseas Accounts

The IRS has extended its deadline for U.S. taxpayers to enter a voluntary disclosure program regarding their offshore foreign bank accounts. The IRS decided to extend its initial Aug. 31 deadline by as many as 90 days to help taxpayers who are struggling to meet the deadline and who are making a good faith effort to report overseas income as part of the voluntary program. The 2011 disclosure program is a type of amnesty program for U.S. citizens living overseas who have foreign bank accounts, as well as taxpayers residing in the United States who hold foreign accounts. The IRS previously had taken a hard line on the program’s timeline, giving taxpayers no leeway on the Aug. 31 deadline. The revision might be a response to criticism from tax professionals who claim that their clients’ cases have been delayed because information has been passed from one agent to another without resolution

The IRS cracks down hard on U.S. taxpayers who don’t provide full disclosure of overseas accounts – the top penalty has been increased from 20 percent in the 2009 program to 25 percent in 2011, and it applies to accounts in existence from 2003 through 2010. To further deter scofflaws, the IRS guidelines outline the civil penalties and the range of criminal charges that face account owners whose holdings are discovered by the IRS rather than through voluntary disclosure.

As well as the decision to extend deadlines, the IRS also announced that taxpayers already in the program can now choose to opt out of the disclosure program’s civil-settlement process and have their cases reviewed under standard audit procedures. The IRS’ decision to do this came about after significant criticism of the current program.

In addition to the deadline issue, many tax professionals also believe that the IRS has failed to distinguish between real tax evaders with complicated financial accounts and others who have been swept up in the crackdown. The small fry caught up in this includes people who are heirs to family holdings outside the United States. In response, the IRS announced a new lower penalty rate of 12.5 percent for people whose offshore accounts are less than $75,000 for the applicable time frame. Criticism of the program’s unwieldy structure and slow procedures might be the impetus behind a further IRS announcement that allows taxpayers who have already entered the voluntary disclosure program to opt out. According to the IRS, those who chose to do so will not be penalized further.

Opting out of the voluntary disclosure program could be more costly for some taxpayers, but not for others. Taxpayers who choose this option will have their cases reviewed by a central committee, which will take the taxpayers’ statements into account before deciding on appropriate penalties. The IRS also reserves the right to remove taxpayers from the voluntary disclosure program if they are deemed uncooperative or if the IRS examiners believe their case won’t be resolved within a reasonable time frame.

The revisions to the 2011 disclosure program have met with approval from some tax advisors who’ve been involved in assisting clients with compliance. The issue is complicated, and the IRS’s revisions to their guidelines have not made matters any easier. For more information on the disclosure program and on current tax laws regarding overseas bank accounts, consult your tax professional.

Get this Article  Get this Article & Suite of Tools

 

These articles are intended to provide general resources for the tax and accounting needs of small businesses and individuals. Service2Client LLC is the author, but is not engaged in rendering specific legal, accounting, financial or professional advice. Service2Client LLC makes no representation that the recommendations of Service2Client LLC will achieve any result. The NSAD has not reviewed any of the Service2Client LLC content. Readers are encouraged to contact their CPA regarding the topics in these articles.

Protected by Copyscape Plagiarism Finder

Dynamic Content Powered by Service2client.com
SEO Content Powered by DynamicPost.net

 

ICFiles
SOC 2

content

Secure File Transfer Soc 2 starts at $1 per month

Join Us

 

content

 
website bundles

MyWeb, WordPress
1 Click Hosting
Install free themes

websites

Hosting Bundles

 
 
Electronic Commerce

Copyright © 2024 Service2Client, LLC All Rights Reserved.
Terms of Service  |  Privacy Policy

CPA Website Content Powered by Service2Client.com


 

CLOSE